The Bitcoin -Pow -Algorithm: Why it is not as efficient as you think
For over a decade, the consensus protocol of the largest cryptocurrency in the world, Bitcoin, has had on the Pow Algorithm (Proof of Work) to secure its decentralized network. This algorithm was widespread due to its high security and decentralization of other cryptocurrencies and blockchain networks. However, many critics have long argued that this approach is inefficient and can lead to a block time distribution that promotes large miners at the expense of small measures.
In this article we will examine why Bitcoin’s Pow algorithm does not use Hashes chain with lower differentiation and examines alternative approaches that could possibly improve their efficiency.
The current pow algorithm
The Pow algorithm from Bitcoin is based on the SHA-256-hash function, which is mathematically intense. Each block in the blockchain contains a clear digital signature with the recipient’s public key. In order to validate transactions and create new blocks, miners have to solve complex mathematical puzzles with the help of the hash functions.
This is how it works:
- Bergers compete for a solution for the following equation:
2^256 * 13^83 % 2^64 = 0
X is the block number, Y is the goal -Hash value.
- The miner who finds the solution may first add a new block to the blockchain and transfer it to the network.
- Coverers check that the new block contains applicable transactions by checking whether the sender’s public key was used at least once.
The problem with the current Pow algorithm
The current Pow algorithm suffers from several questions:
* Block time distribution : As you have already mentioned, the current Pow algorithm leads to a very unbalanced distribution of the blocks. Large miners dominate the network, while small users are often left behind.
* Computing complexity : The arithmetic requirements for mining bitcoin have increased exponentially over the years, which makes it more expensive and less energy-efficient.
* Energy consumption : The mining bitcoin requires considerable amounts of energy, which can be a big environmental problem.
The alternative: hash-based algorithm
In order to address these problems, some researchers have proposed alternative algorithms that use hashes with lower differentiation. Here is an overview:
* Hash-based algorithm : Instead of using complex mathematical puzzles to create new blocks, this approach is based on the hash function itself. The idea is to reduce the difficulty of finding a solution by the size Or the number of inputs in the hash function is increased.
* Modular hash functions : Modular hash functions such as SHA-256 with a larger input variable (e.g. 512 bits instead of 256) can be interpreted so that smaller output shees are generated with higher security.
Advantages of the hash-based algorithm
The use of a hash-based algorithm can have several advantages:
* improved efficiency : By reducing the calculation requirements for mining, hash-based algorithms can increase the number of blocks that can fit in a certain period of time.
* Reduced energy consumption : If energy prices rise, algorithms on a hash base can help reduce energy consumption by increasing the block production rates.
* increased decentralization : Hash-based algorithms can promote decentralization by reducing the influence of large miners on the network.
Examples and implementations
Several cryptocurrencies have implemented hash-based algorithms, including:
* Serenity : A cryptocurrency of Proof-of-Stake (POS) that uses a modular hash function to create new blocks.
* Shard : An upcoming cryptocurrency that uses a hash-based algorithm to make new blocks.
* Masternode : A decentralized network of nodes that validate transactions using a hash-based protocol.
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